Oil markets brace for maintenance season

**SPEAKER_1** (0:00)
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**Kai Ryssdal** (0:31)
Today on the program, catching up on where things stand. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Rizdall. Monday, today, August the 31st. Good as it always is to have you along, everybody. So, I was off last week, did a mostly good job of staying away from the news, except for one thing. Kevin Warsh's big speech at Jackson Hole on Friday couldn't really not tune into that. You have by now seen and heard plenty about what the Fed Chairman had to say. Underlying inflation trends have not, he said, meaningfully improved, and the Central Bank has, and this is a quote, work to do. In the days since, market expectations have taken the Chairman's words to heart with ever higher odds that the Federal Open Market Committee is going to raise rates by a quarter of a percentage point at its next meeting, that's in September, and it is roughly even money that there will be another quarter point bump in December.
You put all that together and try to figure out what it means, what do you got? Well, we've got Marketplace's Mitchell Hartman.

**Mitchell Hartman** (1:49)
Inflation hawks like Dan North at Credit Insurer Allianz Trade think the futures market has it exactly right about the Fed's next interest rate move.

**Dan North** (1:58)
There's been no progress on inflation. We're right back to where we were before the war started.

**Mitchell Hartman** (2:06)
He points out the PCE price index is nowhere near the Fed's 2 percent target.

**Dan North** (2:12)
Without an interest rate hike, you're going to have a hard time reaching that. We're still quite a ways from it, and it's been very, very sticky. An interest rate hike is certainly warranted.

**Mitchell Hartman** (2:24)
In the dovish camp is Jay Hatfield at Infrastructure Capital Advisors. He argues the government has been overestimating headline inflation, and the core measures will come down soon, even if oil prices stay elevated.

**Jay Hatfield** (2:37)
We think it would be ill-advised to raise rates at this juncture, but we do acknowledge that the majority of the FOMC, which is what matters, absolutely does want to raise rates.

**Mitchell Hartman** (2:49)
Partly because Warsh and his fellow Fed governors want to demonstrate their political independence from President Trump, who wants lower rates to stimulate the economy. Economist Erasmus Kirsting at Villanova sees Chairman Warsh playing a careful game.

**Erasmus Kirsting** (3:05)
Not painting himself into a corner and having to raise rates, but at the same time, he is willing to take that step if necessary. The data is not screaming for a move in one direction or another. This is not a crisis.

**Mitchell Hartman** (3:20)
But what if the Fed does hike rates soon? Would that be a crisis? Well, it surely wouldn't help, says Guy Ciccola at Inside Mortgage Finance. He points out that mortgage rates are already approaching 7%.

**Guy Ciccola** (3:33)
Just a deal killer. I don't think there are any indications rates are going to come down. US debt level and deficit, an ongoing war, gas prices, nothing bodes well for the mortgage market.

**Mitchell Hartman** (3:47)
The consumer economy already showing signs of inflation fatigue might slide more, says Jeff Klingelhofer at Aristotle Pacific Capital.

**Justin Ho** (3:56)
We are all having to adapt to a world of higher interest rates.

**SPEAKER_1** (3:59)
Every consumer is feeling that pinch, is feeling that pressure.

**Mitchell Hartman** (4:03)
As borrowing costs go up, while inflation eats away virtually all of our wage gains at work. I'm Mitchell Hartman for Marketplace.

**Kai Ryssdal** (4:11)
Apropos of nothing other than a changing of the guard at a company worth $4.6 trillion, today is Tim Cook's last day running Apple. He will become the executive chairman. John Ternes, who's in charge of hardware engineering, takes over tomorrow.
Elsewhere in American market capitalism, starting the week and ending the month, the stocks were down, oil was up. See also the renewed shooting in the Middle East. Details numbers when we get there.
It was a toss up for us in our news meeting today. Do we start with the bond market and rates, or do we go with jobs? You know how that turned out, but it was close because this is a big week in this economy, jobs-wise. Tomorrow is going to bring us the latest job openings and labor turnover survey, a report basically on what demand there is for labor right now and how much labor market churn there is. Friday, of course, is the biggie, the August jobs report will get the number of new jobs, the unemployment rate, and wages too do not sleep on wages. Expectations, to be totally honest, are for more of the same, the low fire, low hire labor market we have had for months now. But here's the thing, labor demand has a huge effect on this economy. Marketplace's Justin Ho is on that one.